Why did P. Kishore of Everonn commit fraud??

As per the reports, The Central Bureau of Investigation (CBI), last week, arrested P. Kishore, along with an Additional Commissioner of Income Tax, Andasu Ravindar, in connection with payment of bribe to conceal a taxable income of Rs. 60 crore out of Rs. 116 crore unearthed during a search and survey operation in Everonn's premises on 4 August 2011.

Now, the question is : What inspires an established and well respected CEO like P Kishore of Everonn commit fraud and try and bribe his way thru Income Tax?

- WHY should a listed Company like Everonn actually SURPRESS profits?

- Its counter intuitive... This is a LISTED Company and gets valued at XXX multiples on better profits and revenues - so why HIDE profits? If anything, shouldn't profits be HIKED not suppressed??

- Was the issue that if the Income and hence the tax were identified - then the penalty of non payment of taxes would completely destroy the firm?

- Does this also mean that P. Kishore was determined NOT to reveal that his Company had concealed income so as to protect his reputation and also make sure his 'star studded' investor board remained on his side??

- I am very confused. How do auditors and accountants sign of on balance sheets that show cash flows that are not linked to P&L??

This is very depressing. Just as you see a new business category and model turn superstar, the skeletons come tumbling out...

I read this post and Googled around to find out more. It keeps reminding me of a gentleman I met while in my selling-solutions-to-restaurants-to-hospitals days : he would give his software at highly discounted rates if he could get traction in the markets. And that need not necessarily mean purchase managers would pay money ; they were open to receiving money too! He was cash rich with plans to set-up larger development studios, going public was the goal.

When we live in a country where it's possible to bribe a cop to get out of a ticket, something tells me you have to be doing some sort of wheeling-and-dealing, to get to "10,139 learning centres across 27 states and works with 16 State Governments of India."

this could not have happened without a book entry on debit side for expnenses say depreceation . or sales invoices going to other bank accts.on credit side. its a very john greesham novel like. cant believe it. so if this was to be siphoned its a satyam situation.i think the accts dept, auditors are in for frying times.

but why. could be he wanted to siphon and buy shares out . the pledged ones and buy more from the market in his name . yes this must be the case .it makes sense . the pledged shares were coming in for a problem sooner or late what with educomp at 200 odd. definitely bears would have had him . the markets were ok with the results, so he must have thought lets siphon the rest.

bse is heading for 14 odd thou and dow 5000 its a matter of time and everonn will be in double digits . its poosible its ict and govt contracts will be in jeopardy. disquslifications revenue model? probs. fiis have dumped it . the end game is on

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Carl Weinberg, the chief economist at High Frequency Economics is very worried about Europe. His central forecast is that the debt crisis will lead Europe into a depression that will mean soaring unemployment, deflation and zero interest rates for the foreseeable future.

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i do understand that it will be disbelief at first read, but if i reveal something , confess, perhaps the eerie will get you. you see ive been out of the market since apr 18th . what led me to do it . i pulled out everything in 1 hour. like an algorothmic trade. why what made me do it. ? yes patterns , deeply embedded in the subconscious. the last time mk srivatsan of darashaw when this guy says be cautious it means only fools will tread where angels fear. the good old better half came back from her place, the same morning and said our spiritual astrologer says get out you'll lose everything including the house( hell knows no fury than a lady scorned) . yes i was deeply leveraged like a gambler playing for the house, yes my jupiter was in the 8th house , when you read the above titles and each one from a seperate author but amazingly fitting up like an article from the same author and when they are confused , then the sixth , gut feeling (your astrology) thats what saves your soul like johnny depp's in the pirates of the caribean. on 5th of sept i would have lost my house , my parents , my soul and my dog . did the dog save me . the hindus believe so. you feed a dog he saves your soul.

what do i live on, a glass of milk with bananas in the morning, pulse grains of the day in the afternoon, pure vegetarian purification . does it make me see tomorrow ?. i think so. i look at this from the scientific to the spiritualism. the next blackswan will come from the earth. the geological time fractals are showing all the indications how many have noticed 8 earthquakes in 7 days . ignored in greed and lust. yes the utter deprevation of mankind . yes its pay back time . the non believers wont survive. they are still buying gold , like midas. but when calamities strike the govts deficits will prevent any more protection. theres no money . everyones going bankcrupt.

but when the inevitable occurs take any angle, the i ching, the mayans , when the apocalypse comes and you need cash . the midases will realize that every one will have to sell gold to raise cash to buy the last piece of bread. that eveything has turned to gold and no one wants it any more , when the rich and the beggar are equal for once. yes heed the signs . i have warned other sites. i came across the rodin hoods by sheer probabilistic event. perhaps god wanted me to pass on the message.

my prediction very much like the titles you read above because i can see it happening because of the events taking place NOW. dont buy gold now. hunt for the one commodity which will come from the earth. thats oil . wait for the worst marco news . when oil hits dirt price pick up. the 2012 /2013 war between israel and iran between iran and saudi will take it to $ 200.or even $ 300. be in cash repeat may day, may day may day be in cash. now. in liquid funds . protect your soul

i follow stock markets pretty closely, but somehow this pc of information just missed me! then ended up googling as to why a company would suppress profits when its going to help them get a better valuations.

of what i read, i understood that mr P Kishore was caught bribing in trying to reduce income tax liability. this i would confer would be different from understating profits. as i understand, it would in fact enhance "net" income in hand. however this would not reflect in books.

Which essentially means that he was trying to take out a part of the actual profit the company earned for his personal or unstated gains or reasons even at the cost of his company losing out in valuation. perhaps he knew that he could always reverse the valuation by showing actual or may be inflated profits since he being founder had great confidence in the company and its potential...

what a sad end really.. how much does a person really need to live a good life. beyond a point, making money is only to prove a point and not to really enjoy it. what point one could prove by stealing it from its own piggybank?

As per the reports, The Central Bureau of Investigation (CBI), last week, arrested P. Kishore, along with an Additional Commissioner of Income Tax, Andasu Ravindar, in connection with payment of bribe to conceal a taxable income of Rs. 60 crore out of Rs. 116 crore unearthed during a search and survey operation in Everonn's premises on 4 August 2011.

Now, the question is : What inspires an established and well respected CEO like P Kishore of Everonn commit fraud and try and bribe his way thru Income Tax?

- WHY should a listed Company like Everonn actually SURPRESS profits?

Errr.... When u HIDE INCOME (to avoid tax), the revenue moves out of the P&L and hence reduces the PROFIT?

i did .. and perhaps said exactly the same thing which you just said ...

he took out profits ( and the revenues as well which had earned this profit) out of the company books. In other words, he took out profits of his company out of its books for his personal or unstated purposes.... this would then reduce both revenue and profit from the books and hence lower taxable income and the taxes..

i hope i understood it right. just read the article and the comments once again. but doubts now cropped up. time to hit google again!

This is an interesting question and a thought provoking article. I feel that the importance of value systems has come down in recent times. Today its more about profits, growth, balance sheets, etc....and some people dont mind taking the unethical short cut to achieve their personal goals or career ambitions. This is not good for the organization but benefits a few people.

We hear stories of people from the top Ivy league schools, leading politicians, CEOs, etc who do some kind of fraud, scam or or cause intentional damage to their firm. Sorry to say this but its sheer greed of the decent well-to-do people to make a huge million $ or billion $ jackpot, which finally leads them to bullshit. The same BS that took them to the top brings them down. I wont be surprised if someone poor or middle class commits some crimes, but I cant imagine why affluent, well educated, respected, and those who can work and earn independently resort to such crimes.

Greed is one aspect, but there are cases where promoters/owners or key directors may be involved in influencing or doing such frauds or scams. This was clearly evident in Satyam scam. Further, some directors (esp. independent directors) sometimes are just silent or inactive in taking or influencing or questioning the decisions of companies. Adding more pain is the fact that these so called independent directors are directors for dozens of companies. What were they doing?

What have regulators done to curb or define the roles/responsibilities and accountability of independent directors. There should be a strict restriction on the number of directorships and these directors have to be made to work actively.....not just sitting, nodding and accepting views or promoters and taking fees. They should be made to report to shareholders on why or why not they voted or not voted or approved or not approved certain proposals or projects or initiatives. Unfortunately many leading corporate honchos, senior professionals from ivy schools, business biggies, political big shots, etc are directors in several companies and this should change. Even people with experience in industries from broad based sections of society (like some rodinhoods here) should be included in boards purely based on merit, knowledge, experience and what they bring to the table (not just degrees and fancy brand names).